The Quoddy Tides

Eastport, Maine

2007 Jul 27

Quoddy Bay's request concerning
pipeline expansion turned down

by Edward French

The Federal Energy Regulatory Commission (FERC) has rejected a request by Quoddy Bay LNG to reconsider a February 2007 decision allowing Maritimes & Northeast Pipeline LLC to increase its mainline design capacity and accommodate imported regasified liquefied natural gas (LNG) from Canada. Quoddy Bay wanted the commission to condition the approval by imposing a "reciprocity condition" that would allow construction to proceed, but would permit no gas from Canada to flow through the new facilities until the Canadian government permits the passage of LNG carriers through Head Harbour Passage.

The commission found this proceeding "is not the proper forum for addressing the issue of LNG carrier passage through Head Harbour Passage because this issue does not affect the viability of Maritimes' project and is therefore not relevant to this proceeding." The issue of LNG carriers going through Head Harbour Passage "potentially affects the viability of the pending Quoddy Bay and Downeast projects and is more appropriately addressed in those proceedings."

In separate orders issued on June 1, FERC rejected New Brunswick's request to suspend proceedings in both the Quoddy Bay and the Downeast proceedings.

Approving Quoddy Bay's request "would not be appropriate because it would impose a condition on Maritimes over which it has no control. Because Maritimes has no control over the position of the Canadian authorities on the issue of LNG tanker passage through Head Harbour Passage, it is unable to influence Canada's position," the commission wrote in its finding. It also would place Maritimes at risk for the recovery of more than $300 million in capital expenditures until the Canadian government permits the passage of LNG carriers through Head Harbour Passage in two projects that are unrelated to Maritimes' proposal.

Marylee Hanley, manager of government and public affairs for Maritimes & Northeast, is pleased with the decision, agreeing with FERC that the proceeding that considered the pipeline capacity is "not the proper forum." Previously, Maritimes & Northeast had termed Quoddy Bay's filing "a misguided effort to exert pressure on the Canadian government and influence Canadian policy."

Hanley, though, adds that Quoddy Bay's request will have "absolutely no effect" on the possibility of the pipeline company entering into an agreement with Quoddy Bay to carry gas from the company's proposed terminal at Pleasant Point. The Maritimes & Northeast pipeline is "an open access pipeline," and the company is required by FERC to make it available to any company that seeks to use it, according to Hanley. "We're eager to enter agreements with anyone who wants to move gas on our system."